LTC Bonus Planning in the Business Market

When it comes to Long-Term Care Planning in the business market, I find that many advisors are unaware of the different plan options available for employers.  While I won’t go into the different options or strategies, I would like to leave you with one sales strategy that I feel is overlooked and entails a completely different type of tax deduction compared to the ‘health deduction’ that would typically apply to employers when providing LTC benefits to employees and/or executives.   

Because a Section 162 Bonus Plan is a ‘compensation plan’ to help reward and retain top talent for a business, it is treated different from a tax perspective.  The plan provides the opportunity for the business to deduct up to the entire LTC premium for each employee vs only a portion of the premium using different LTC plan options.  That being said, the employee may be responsible for paying taxes on that bonus, whether it’s a 10-year bonus plan or a 5-year bonus plan.  But do keep in mind that employers do have the option to pay the taxes for the employees as part of the total bonus amount.  This is referred to as a double bonus.  In addition to the flexibility in this plan, it is simple to administer and the LTC benefits are not subject to ERISA compliance!